Title

Presentation

Arcus Biosciences, Inc. misses on earnings expectations. Reported EPS is $-1.02 EPS, expectations were $-0.92.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Arcus Biosciences, Inc. First Quarter 2026 Business Update and Financial Results. After today’s prepared remarks, we will host a question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Holli Kolkey. Holli, please go ahead.

Holli Kolkey: Good afternoon, and thank you for joining us on today’s conference call to discuss Arcus Biosciences, Inc.’s first quarter 2026 financial results and pipeline update. I would like to remind you that on this call, management will make forward-looking statements, including statements about our development strategies and our expectations regarding the advantages and opportunities afforded by our investigational products, our clinical development milestones and timelines, our projected cash runway, and our financial outlook. All statements other than historical facts reflect the current beliefs and expectations of management and involve risks and uncertainties that may cause our actual results to differ from those expressed.

Those risks and uncertainties are described in our most recent quarterly report on Form 10-Q that has been filed with the SEC. For today’s call, please refer to our latest corporate presentation posted in the Investors section of our website. This afternoon, you will hear from our CEO, Terry Rosen, Chief Medical Officer, Richard Markus, President, Juan Jaen, and CFO, Robert Goeltz. With that, I would like to turn the call over to Terry.

Terry Rosen: Thanks very much, Holli, and thanks, everyone, for joining us this afternoon. We are starting a new era for Arcus Biosciences, Inc., with full ownership of our lead program, casdatafan, our Phase 3 kidney cancer study, PEEK-1, enrolling rapidly, a clear path to win in the frontline, and the next generation of molecules for inflammation and immunology that can be advanced rapidly through development, with strategic optionality imparted by a rich portfolio of wholly owned molecules and programs. We are at an inflection in value creation for patients and shareholders that will continue to accelerate over the next 12 to 18 months. Arcus Biosciences, Inc. has proven to be a highly productive company creating and advancing a steady stream of potential best-in-class molecules for patients with cancer and inflammatory and autoimmune diseases.

We believe that discovery is not a commodity, and we have built exceptional small-molecule medicinal chemistry and drug discovery capabilities. Our scientists utilize proven biology to create unmatched medicines designed to raise the standard of care. Since its inception, Arcus Biosciences, Inc. has advanced molecules from program initiation to IND filing in as short as 18 months, and through an accelerated platform and signal-seeking study, moved from proof-of-concept Phase 1 studies to randomized Phase 2 and registrational Phase 3 trials in just a few years. Today, the company is laser focused on cascadifan, which represents a market opportunity of more than $5 billion in kidney cancer alone. I want to stress that cascadifan’s efficacy advantages are underpinned by much better molecular properties and a superior pharmacodynamic profile.

This profile reflects the key capabilities in Arcus Biosciences, Inc. that I described earlier. The simple fact is that cascadifan hits its target much harder in a more robust and sustained way than belzutafan, as illustrated on slide 6. This is a point we have emphasized since the data first emerged. These data are clear and they are striking. We believe this fundamental differentiation between cascadifan and belzutafan, and the limitations of belzutafan’s pharmacodynamic profile and durability of effect, are undoubtedly contributors to, if not the principal driver of, the outcome of LITESPARK-012. And the pharmacodynamic advantages of cascadifan will continue to result in improved clinical outcomes across the lines of therapy; I want to emphasize this point.

This dramatic difference in profile has been evidenced since late last year. It is not at all opaque. Its manifestations in clinical outcomes are dramatic and are at the core of our differentiation. No results to date are surprising. Our top priorities for 2026 are clear. One, complete enrollment for PEEK-1, our second-line Phase 3 study, and two, initiate a Phase 3 study in the frontline patient population. With the recent outcome of LITESPARK-012, cascadifan has a clear path to consolidate a fragmented frontline setting as the first HIF-2α inhibitor in this setting. Let me spend a moment on why cascadifan is at the center of everything we do. We believe cascadifan can transform the treatment paradigm in clear cell renal cell carcinoma, and our development strategy is designed to generate evidence to secure cascadifan as a backbone therapy so that every patient has the opportunity to benefit from cascadifan across each line of therapy.

PEEK-1 represents our fast-to-market strategy. This is designed to build on the clinician enthusiasm we have seen for cascadifan as an investigational agent and to generate the data to support the approval of a foundational treatment for clear cell RCC as rapidly as possible. Enrollment in PEEK-1 is accelerating, and we are on track to complete enrollment by year-end 2026. We are confident that PEEK-1 will establish cascadifan plus cabo as the new standard of care in the IO-experienced setting. The peak sales opportunity for cascadifan in this setting alone is more than $2 billion. At the same time, we are aggressively building a holistic strategy to embed cascadifan across the treatment paradigm. We have been making tremendous progress in the frontline setting with multiple IO combinations now enrolling in ARC-20 and generating data in support of our first-line strategy.

These approaches offer the greatest potential for long-term survival for patients. One of our key objectives today is to make very clear our integrated development strategy for cascadifan. It is actually quite straightforward, and here is how we believe things will play out. In the first line, our bedrock therapy will be cascadifan, ipi, and anti-PD-1. We believe that we can drive the approximately 35% share of ipi/nivo to a regimen with greater than 50% of the important first-line market. While the IO regimen of ipi/nivo is the dominant therapy today, there is a segment of physicians that is always going to want to reach for a TKI, particularly for patients with a fast-growing, bulky tumor. Therefore, we will also be developing a cascadifan combination inclusive of a TKI, a TKI with a well-established track record of both efficacy and safety that will allow the patient to have cascadifan plus cabo as a subsequent regimen.

Our second-line treatment, now enrolling as the registrational trial PEEK-1, will be cascadifan plus cabo, building on the standard of care in this line, cabozantinib monotherapy. Finally, we will have a third-line-plus regimen, cascadifan with another well-established TKI, and we will be investigating this regimen in both belzutafan-naive and belzutafan-experienced patients. We think this is a very important and, frankly, very cool study. We also plan to explore novel cascadifan combinations in HCC, liver cancer. I would like to emphasize that all of the clinical development plans discussed today are accounted for within our existing budget and have no impact on the guidance and runway that we have provided. We now control, in all respects, our early-stage pipeline, including our CCR6, CD89, and CD40 ligand programs, all of which are expected to report IND candidates in the next 6 to 18 months.

So, while we focus our resources—capital, human, and otherwise—on the late-stage development of cascadifan, the follow-on programs in our pipeline are early but also with clear, early, and capital-efficient clinical proof-of-concept opportunity and huge commercial potential. Therefore, we anticipate low spend and short timelines to get to proof of concept that will drive disproportionate value creation. Juan will discuss these programs in more detail later on in this call. If you want to walk away with just one thing from today, it is that Arcus Biosciences, Inc. has complete control of its destiny. The core asset of the company is cascadifan. We have the strategy, data, and resources to transform the treatment of clear cell RCC and create the $5 billion-plus drug.

Robert will further elaborate on the enormous commercial opportunity here. We also continue to leverage our demonstrated competitive advantage in small-molecule drug discovery—an increasingly scarce capability—to generate wholly owned and unique development candidates, advancement of which further enhances our strategic optionality. With that, I would like to turn the call over to Richard to discuss our clinical programs. Thanks, Terry. I would like to start with cascadifan.

Richard Markus: As Terry described, our development plan is designed to establish cascadifan as a foundational standard of care in clear cell RCC so that all patients have the opportunity to benefit from treatment with a cascadifan-based regimen across multiple lines of therapy. At ASCO GU this year, we presented updated ORR and PFS from our four late-line monotherapy cohorts of ARC-20. As you can see here, the efficacy data continued to improve with longer follow-up at each data presentation. Moving to slide 12, we show the ORRs for the 100 mg QD cohort, which is the dose and formulation being used in our Phase 3 studies; the confirmed ORR increased from 35% at the August data cut to 45%. A 45% ORR in this late-line patient population is rather remarkable.

It is twice that observed with belzutafan in LITESPARK-005, or any study in this patient population. Similarly, the confirmed ORR in the pooled analysis improved from 31% to 35%, well above the range of ORRs that have been observed with belzutafan. On slide 13, we show the Kaplan-Meier curve for the 100 mg cohort. As you can see here, the 100 mg cohort shows an impressive median PFS of 15.1 months after 17.9 months of median follow-up. On the next slide, we show the latest Kaplan-Meier curve for the pooled analysis. The median PFS remained at 12.2 months. Overall, we are seeing PFS that is two to three times longer with cascadifan monotherapy than the 5.6 months observed with belzutafan in the same setting. And, as is often discussed, while the median is an important benchmark, it is not the only metric that is important.

As you can see here, and perhaps more impressive, is the number of patients still on treatment beyond 18 months and even beyond 24 months. These data clearly support the proposition that cascadifan is the best-in-class HIF-2α inhibitor, and our highest priority now is to maximize the potential of this molecule in ccRCC. Our first registrational trial, which is in the second-line setting, is well underway. Enrollment in the ongoing Phase 3 study, PEEK-1, is accelerating, and we are on track to complete enrollment by year-end. We are confident that PEEK-1 will establish cascadifan plus cabo as the new standard of care in the IO-experienced setting. With a sole primary endpoint of PFS and a 2:1 randomization favoring the experimental arm, and cabo as the control arm, we believe PEEK-1 is optimized for both probability of success and speed to data.

I would like to spend some time now on the frontline setting. With the outcome of Merck’s LITESPARK-012 last month, cascadifan has the opportunity to be the first HIF-2α inhibitor option in the frontline setting. Treatment in the frontline is generally bifurcated into IO/IO or a TKI/anti–PD-1 combination. This currently leads to the conceptual trade-off between longer time to response or higher primary progression but with the potential for durable responses and long-term survival with the IO/IO option, or a faster time to response and lower primary progression but with much more treatment-associated toxicity for the TKI/anti–PD-1 options. There is currently no treatment option that has the ability to both rapidly control disease and provide the best chance for long-term survival, while also having a favorable tolerability profile for long-term use.

We believe a cascadifan plus IO/IO combination in the frontline setting has the potential to deliver on both of these fronts. We are enrolling several cohorts within the ARC-20 study evaluating cascadifan combinations in the frontline setting. While the data are maturing, primary progressive disease rates have already been shown to be low—just 7%, or 2 out of 30 patients—for the cascadifan plus zimberelimab, our anti–PD-1 cohort. This rate compares favorably to published rates for anti–PD-1 monotherapy or ipi/nivo in the first-line setting, and in fact, it is close to the rate of a TKI-containing regimen but without the need for the TKI. We are also enrolling a cohort evaluating cascadifan plus zimberelimab plus ipi. Emerging data from these cohorts of ARC-20 will inform the first-line registrational strategy, with the goal of finalizing the Phase 3 study protocol and beginning start-up activities by the end of this year.

In parallel, we will shortly begin to evaluate additional cascadifan plus TKI–containing regimens in the early- and late-line settings, including in patients with prior belzutafan experience. This effort contemplates the preference and, in fact, the strategic necessity to utilize alternative TKIs as patients advance from one line of therapy to the next. Near-term, we expect to have multiple data readouts for cascadifan in 2026. First, mature ORR data and initial PFS data for approximately 45 patients treated in the ARC-20 cascadifan plus cabo cohort in the IO-experienced setting will be presented at an investor event or at a medical conference, and all patients will have had at least 12 months of follow-up. Second, we will share initial data from the ARC-20 cohorts evaluating cascadifan in early-line settings, including the cohort evaluating cascadifan plus zimberelimab in the first line.

We also expect updated data from late-line monotherapy cohorts, including overall survival. Before I hand it over to Juan, I would like to quickly touch on quemliclustat, our small-molecule CD73 inhibitor. CD73 is highly expressed in pancreatic cancer, and high CD73 expression is associated with significantly poor prognosis in several tumor types. In spite of this, as we recently published in Nature Medicine, in our Phase 2 study, patients with higher CD73 or adenosine activity were the ones with longer PFS and OS in response to chemo treatment. Pancreatic cancer is one of the most aggressive cancers, with an average 5-year survival rate of just 13%. In PRISM-1, our Phase 3 study evaluating quemliclustat plus gemcitabine and nab-paclitaxel versus gemcitabine and nab-paclitaxel in the frontline pancreatic setting, we completed enrollment in September 2025.

Results from this study are expected in 2027, and if positive, PRISM-1 could represent the first transformative therapy for an all-comer first-line patient population in 30 years. There is no biomarker requirement, and no known resistance mechanism, and data to date have indicated that the regimen was well tolerated. Finally, we recently announced that the Phase 3 STAR-121 study evaluating our anti-TIGIT, domvanalimab, plus zimberelimab and chemotherapy versus pembrolizumab plus chemotherapy as a first-line treatment for metastatic non-small cell lung cancer will be discontinued due to futility. While these are certainly not the results we expected, the study had one important positive outcome. In addition to the assessment of domvanalimab in this trial, STAR-121 also evaluated zimberelimab plus chemo as an exploratory endpoint.

Zimberelimab plus chemo performed consistently with respect to overall survival as compared to pembro plus chemo. These data are consistent with what was observed in numerous studies with zimberelimab, and this randomized dataset provides valuable support for the utility of zimberelimab as an anti–PD-1 combination partner for Arcus Biosciences, Inc. and its collaborators. I would now like to turn the call over to Juan to discuss our immunology and inflammation programs.

Juan Jaen: Thanks, Richard. Arcus Biosciences, Inc. has an exceptional small-molecule discovery team. That team has demonstrated time and time again the ability to create highly effective drug candidates against difficult targets. We have been utilizing this expertise to create and develop drugs that have the potential to address very large markets in inflammation, allergy, and autoimmune diseases. In-house expertise in immunology has been a core aspect of our discovery group since Arcus Biosciences, Inc.’s founding, having been key to many of our oncology programs. Our team is addressing well understood and validated mechanisms and has implemented a two-pronged strategy in immunology. First, we leverage medicinal chemistry capabilities to design and create small-molecule drugs that regulate key cytokines therapeutically validated by existing biologics.

Secondly, we target immune cell types that play key roles in human disease and have been historically understudied, such as mast cells and neutrophils. Our first molecule in the immunology area to enter the clinic will be AB-102, a highly selective, orally bioavailable MRGPRX2 antagonist. In the coming weeks, we will be sharing its preclinical profile in an oral presentation at the Society for Investigative Dermatology. The presentation will highlight the ability of AB-102 to fully block MRGPRX2-dependent activation and degranulation of mast cells. AB-102 inhibits all common human MRGPRX2 variants. We have optimized the potency of AB-102 under physiological conditions, such as in human blood and serum. Due to its potency under these conditions, we believe that AB-102 is a potential best-in-class, once-daily oral treatment for chronic spontaneous urticaria and other atopic conditions such as atopic dermatitis and allergic asthma.

It is expected to enter the clinic in 2026, with PK data available shortly thereafter and potential for proof-of-concept data in early 2027. In rapid succession, we have selected an oral, small-molecule TNF inhibitor drug candidate, which is a potential treatment for rheumatoid arthritis, psoriasis, and inflammatory bowel disease, and an orally active, small-molecule CCR6 antagonist candidate as a potential treatment for psoriasis. Both of these molecules are expected to enter the clinic in 2027. We are very excited about the potential for our I&I programs to provide improved options for patients, and we are working to advance these into the clinic as rapidly as possible. I would now like to turn the call over to Robert to discuss the market opportunity for cascadifan and our financial results.

Robert Goeltz: Thanks, Juan. Before I get into the quarterly financials, I would like to spend time on the multibillion-dollar market opportunity in RCC for cascadifan. Sales for RCC drugs in just the major markets are anticipated to grow to $13 billion by 2030. Historically, the market has been dominated by two classes of therapy—IO and TKIs. There have been a number of offerings in both classes, which is why the market is fragmented. In contrast, there are only two HIF-2α inhibitors on the horizon, and we believe our data have demonstrated clear advantages over our only competitor. We have a clear path to consolidate the market and entrench cascadifan as the primary backbone therapy. The development plan that Terry and Richard described is designed to accomplish this objective.

If we look at the sales for the sole marketed HIF-2α inhibitor, belzutafan, which is currently approved only in late-line clear cell RCC, it is already generating annual run-rate sales of nearly $1 billion—only scratching the surface. With cascadifan, we are also targeting earlier-line settings: the IO-experienced population with PEEK-1 and the IO-naive first-line population with our next pivotal study. These earlier-line settings have larger patient populations and longer durations of therapy, both of which contribute to a much larger market opportunity. Specifically, the PEEK-1 study targets approximately 20 thousand patients in the major markets in the IO-experienced setting. We believe our commercial opportunity here exceeds $2 billion.

In the first line, the opportunity is even greater. With the lack of HIF-2α inhibitor competition in the frontline, our goal is to grow the IO/IO share from roughly a third of the market to more than half by adding cascadifan. In fact, our market research indicates that oncologists overwhelmingly prefer the promise of a cascadifan plus IO/IO over a TKI-containing regimen. As Richard mentioned, we also plan to investigate a regimen with IO and TKI in the frontline to address the remainder of the market. We believe the opportunity for cascadifan in the frontline exceeds $4 billion. One point I would really like to emphasize as we think about the commercial opportunity is duration of treatment. We have seen impressive data in late-line monotherapy, with many patients on therapy beyond 18 months.

We plan to share updated data later this year. As we think about earlier lines of therapy, we believe there is the potential for meaningful upside resulting from the durability of effect. Conceptually, we think strong HIF-2α inhibition holds the promise of a long-term tail effect. All in, we think cascadifan has a peak sales opportunity of $5 billion to $10 billion. As a reminder, we own all of the commercial rights to cascadifan other than in Japan and certain other Southeast Asian countries held by our partner, Taiho. Now, let us turn to the financials. Arcus Biosciences, Inc. is well positioned to advance its full pipeline with $876 million in cash at the end of the quarter. We have cash runway until at least 2028. We expect to end 2026 with approximately $600 million in cash, indicative of the declining spend we expect over the year.

As Terry outlined, Arcus Biosciences, Inc. is entering a new era with more control over our pipeline investments. While we are building a plan to take full advantage of the cascadifan opportunity, we are also sequencing these investments such that any significant growth in overall spend will be largely incurred after a PEEK-1 readout. As a result of the wind-down of domvanalimab, and reduced spend on quemliclustat, together with broader spend management, we expect to significantly reduce our overall R&D spend in 2026 and 2027 compared to 2025. For example, as our late-stage efforts have become focused on cascadifan, we have decreased our headcount by approximately 10%. Let me transition to the financials for the quarter. For our P&L, we recognized GAAP revenue for the first quarter of $17 million.

Our revenue continues to be primarily driven by our collaboration agreements. We continue to expect to recognize GAAP revenue of $50 million to $65 million for the full year 2026. Our R&D expenses for the first quarter are stated net of reimbursements and were $122 million and included nonrecurring workforce costs. Our actions to reduce headcount have lowered our ongoing cost structure, which we expect will result in reduced R&D expense in future periods. The discontinuation of STAR-121 and the broader reduction in our domvanalimab-related investment will contribute to a meaningful decrease in R&D expenses as the year goes on. By 2027, we expect more than 80% of our portfolio spend will be directed toward cascadifan development. G&A expenses were $29 million for the first quarter.

Total non-cash stock-based compensation was $19 million for the first quarter. For more details regarding our financial results, please refer to our earnings press release from earlier today and our 10-Q. I will now turn it back to Terry.

Terry Rosen: Thanks, Robert. That was excellent. Let me close by summarizing the key themes for the remainder of 2026. Cascadifan is our number one priority, and this year will be another transformative year for data and, importantly, development as we advance towards commercialization. We expect multiple data sets—cascadifan plus cabo data, initial first-line data, and overall survival data from late-line monotherapy cohorts—all of which will further reinforce cascadifan’s best-in-class profile and support our registrational strategy. PEEK-1 enrollment continues to accelerate, and we are targeting full enrollment by year-end. All of the clinical development plans for cascadifan that were discussed today are accounted for within our existing budgets and have no impact on our guidance or runway.

Beyond cascadifan, our PRISM-1 Phase 3 trial for quemliclustat in pancreatic cancer is fully enrolled and on track for readout in 2027. Juan shared the exciting progress on our I&I portfolio, with AB-102 expected to enter the clinic in the third quarter and our TNF inhibitor and CCR6 antagonist following shortly thereafter. With $876 million in cash and investments, and runway into 2028, we are well positioned to execute on all of these priorities and create significant value for patients and shareholders. We are moving into a new era for Arcus Biosciences, Inc., with full ownership of our lead program, cascadifan, and a clear strategy to win and transform the frontline setting, while rapidly advancing the next generation of wholly owned molecules for inflammation and immunology.

We have no doubt that we will be generating disproportionate value for patients and shareholders over the coming 12 to 18 months. Thank you all for joining us. We will now open the call for questions.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Daina Graybosch with Leerink Partners. Daina, your line is now open.

Receive real-time insider trading and news alerts

Unknown Speaker: David, can you try this today?

Daina Graybosch: Specifically on the cascadifan plus TKI frontline combo, we all know Merck failed with that triplet mechanistically with belzutafan/lenvatinib/pembro in LITESPARK-012. We have the press release, but we do not know the detailed data. What could you see in that detailed data that would give you more confidence in cascadifan plus TKI plus IO, and what could you see in the Merck data that would give you less confidence in the TKI combo strategy?

Terry Rosen: Thanks, Daina. I think we will see what their data say, but the data that are out there tell us a lot already. If you consider what we discussed at the beginning—that pharmacodynamic difference between cascadifan and belzutafan—not only the depth of response, but particularly the durability, and you think of that as a surrogate for its antitumor activity and a direct measure of its ability to inhibit HIF-2, you can reconcile very easily, even in the absence of the data from the study itself, that if you think about LITESPARK-011 versus LITESPARK-012, the duration of treatment you are talking about—if you think about PFS, roughly for the two different studies—is almost 2x. Belzutafan, as a surrogate for HIF-2 inhibition that directly relates to inhibition of the tumor, is clearly losing that effect with time, and dramatically.

On erythropoietin production, on average, you have lost that effect within 9 to 13 weeks. So, in the second-line population, the percentage of time where it is bringing benefit is X, and then in the frontline, it is much less. Then, on top of that, if you think about the regimen, it is a pretty toxic regimen. Even pembro/lenva had about a 37% rate of discontinuation. We know that the triplet was, you know, pretty unfavorable from a patient perspective. So if you think about basically having a diminishing effect of the HIF-2 inhibitor on top of a much longer duration of an arm that has more AEs than the control arm, you are basically paying a price but getting less benefit. It is not surprising that you would end up with a hazard ratio that might not be too favorable.

For us, we are going to select a TKI that we think has a very favorable profile relative to the TKIs out there. But the most important feature will be that we have a HIF-2 inhibitor that has its robust effect, and the durability of that effect is essentially the same on day one as it is on day 730.

Daina Graybosch: Got it. Thank you very much.

Terry Rosen: Thanks, Daina.

Operator: Your next question comes from the line of Jonathan Miller with Evercore. Jonathan, your line is now open.

Jonathan Miller: Hi, thanks for taking my question, and congrats on all the progress. Looking at a very broad cascadifan development plan with a lot of combinations across first-, second-, and third-line settings, one thing that is notably absent is any approach in the adjuvant setting, which obviously we know Merck is going after. I would love to hear your updated thoughts on adjuvant and why that is missing from the current development plan. And then, related to that, relatively recently you were talking about a more conservative approach to late-stage development for cascadifan—at least with respect to the number of Phase 3 trials you would want to start—and considering partnerships to ameliorate the cost of late-stage development.

Obviously, there has been a bit of a shift there. But, Terry and Robert, I heard you say you do not expect to see any impact on runway or the ability to prosecute all these different programs. I would love to get a little bit more granularity on the sequencing that you are talking about and when you would start these TKI-containing and potential novel combo development efforts to enable you to pursue all these different approaches without running up against bandwidth limitations. Thanks.

Terry Rosen: Thanks, Jonathan. I will let Robert handle that, and then I may have a few comments to add.

Robert Goeltz: In terms of the adjuvant setting, for us, it comes down to two simple things. One is the size of the opportunity, and probably more importantly, the need. When you think about that particular setting, we think that it is around 12 thousand patients or so that get therapy in the adjuvant setting—only the high-risk patients with resection—and their treatment is capped at a year. When you do the math, we think that the opportunity, certainly from a revenue perspective, is smaller than the second line, and probably even smaller than what could be a third-line regimen with an alternate TKI, as we described. The other important part is we have had a chance to talk to physicians after seeing the LITESPARK-012 data, and the bar to add another therapy on top of pembro is considered quite high.

In fact, most physicians told us that they would not add belzutafan to the regimen even in light of the LITESPARK-012 data. So we actually think it will be a minority of patients that ultimately will receive belzutafan in that setting. It is prioritization, and frankly, the other settings—first, second, and third line—are higher on the list for us. In terms of the sequencing of the spend, as we highlighted, we have PEEK-1 up and enrolling right now. Our goal is to have the study enrolled by the end of the year. The work towards launching these additional Phase 3 studies would have us in a position to move those studies forward as early as late this year into next year, with, obviously, probably our highest priority being that frontline combination with ipi and anti–PD-1.

The other studies will be shortly on the heels. But if you think about the general investment profile for the studies, we will be through the bolus of study start-up for PEEK-1, and the cost profile for PEEK-1 will be starting to decrease as we get into the second half of next year. We think there will be a nice portfolio effect, and when we think about these other studies, the spend really kicks in in late 2027 and into 2028. We see a generally steady spend profile through the PEEK-1 readout as we described.

Terry Rosen: And, Jonathan, Robert gave you the line of the spend along with the studies, and I will give you a bit more granularity on how we literally see the trials themselves playing out. The first study, obviously, is PEEK-1—that is enrolling. As Robert said, it will be fully enrolled by the end of this year, and then we will be waiting for readout. We are going full speed ahead and expect that ipi/anti–PD-1/cascadifan, as we have been talking about for some time, will be getting up and going by the end of this year. We will see where the TKI-inclusive regimen comes in. Without getting into all the detail now, we will be sorting through whether there are actually two registrational studies or a three-arm study is also a possibility.

Finally, in the later-line study that we talk about, we will start off in ARC-20, and as you know, those are relatively small cohorts that enroll very efficiently. Another important point within those studies—and we will get the answers quickly—is that we will be looking at that combination in the third-line-plus, in belzutafan-naive as well as belzutafan-experienced patients. I think that will establish—something we think we know the answer to—but we will have those data even this year.

Jonathan Miller: Excellent. Thank you so much.

Terry Rosen: Thanks, Jonathan.

Operator: Our next question comes from the line of an analyst. Your line is now open.

Operator: Lee?

Operator: Line is now open.

Analyst: Hey, congrats on the progress. One question on the ARC-20 update, especially from the triplet cohort. It sounds like you are enrolling the combination with zimberelimab plus ipi. Can you clarify if we are going to see the initial data from this cohort this year? And what data points would you want to see to enable a Phase 3 frontline trial?

Terry Rosen: Thanks. We do think you will get to see—probably in the fall—the initial data from that ipi/anti–PD-1/cascadifan regimen. We will get a sense of the safety data and the rate of primary progression. While there may be some early ORR data, we do not consider that critical. We are most focused on the safety. We will have an agreement with the FDA as to what safety data package they would want to see to enable us to get that Phase 3 up and going by the end of this year. Because that is the first point, but it is also an important point for that regimen, we will see the rate of primary progression. One thing to recognize about that regimen when we think about triplets, doublets, etc., is we have already talked about the rate of primary progression with cascadifan plus anti–PD-1 alone, and those initial data are quite favorable, where we saw only a 7% rate of primary progression.

If you think about what the cascadifan/anti–PD-1/ipi regimen is going to look like, you basically get four cycles of ipi at the outset, of course with cascadifan and anti–PD-1, but then the duration and the bulk of your therapy is going to be anti–PD-1 plus cascadifan. So both the efficacy you are seeing with that as well as the safety of that will certainly impact the bulk of the therapy. We are excited about that regimen. We think we are well on track to be able to start the Phase 3 by the end of this year and have a good safety data package, and we do plan to share that externally this year as well.

Analyst: Thank you.

Robert Goeltz: Thanks, Lee.

Operator: Our next question comes from the line of an analyst with Goldman Sachs. Your line is now open.

Analyst: Hey, very helpful to see cascadifan’s development laid out across all the different lines of therapy. A couple of questions from me. Looking at the LITESPARK-012 failure in both triplets and the VOCAF discontinuation by AZ, and then all the frontline therapy—doublets or monotherapy—so far, what is your confidence that a cascadifan triplet of any kind, either with IO/IO or IO/TKI, could be safe enough to succeed in 1L? What do you think is the safety bar for 1L? Do those triplets have to show comparable safety profiles to IO/IO or IO/TKI for them to work?

Terry Rosen: We feel very confident, based upon what we already know about our molecules, with triplets—whether it is a triplet inclusive of a TKI or a triplet with ipi and anti–PD-1. Keep in mind, while we have not analyzed in detail—and we will later this year—the zimberelimab (anti–PD-1) plus cascadifan doublet, we have not seen anything untoward with that. We know we can combine with cabo well. We believe that the ipi/nivo regimen has been extraordinarily well worked out in terms of dosing. As I mentioned in my response earlier, you are going to treat with four cycles of ipi; that is well worked out and time-tested. Most importantly, you are only going to be carrying your anti–CTLA-4 dosing for four cycles. We believe we have orthogonal AEs. We have not seen clear combination issues.

With cascadifan, you are basically bringing on-target anemia and, more rarely, hypoxia. We are going to pick a good TKI. We know that cascadifan plus anti–PD-1 looks good. We think a reasonable TKI will not bring anything untoward there. Keep in mind, we have not actually seen the Merck data. Their hazard ratio must not have been good. That does not get to an intrinsic inability to have a triplet; it just says when you are bringing belzutafan on top of a pretty rough doublet, and you are treating for a long period of time, and you are undoubtedly introducing some new AEs but not having a robust long-term efficacy effect, you are probably not creating a favorable hazard ratio. We really do not know exactly how that played out, but all the data with our own molecules suggest that cascadifan is a very well tolerated and robust HIF-2 inhibitor with an orthogonal AE profile from anything that we plan to combine it with.

We will have those data within the next six months or so.

Analyst: Got it. And then a follow-up: Have you seen the efficacy and safety results from that VOLU/cascadifan trial before Astra discontinued it? And would that data be shared with you even if Astra does not plan to share it publicly?

Terry Rosen: Thanks. We have not seen anything other than what we said at the outset. Since they did disclose, you can now know that there were nine patients. What we described was that initial safety signal that was very CTLA-4—and more specifically bolurumab—like. When they dosed down bolurumab but kept cascadifan at the same 100 mg dose, we did not see any more of it in those patients, who still continued on. In fact, the interesting thing out of that—as we have commented before—is we did not see any progression. If anything, given that it was nine patients, it is not obvious whether that was even purely bolurumab or not. What is obvious to us, as we were thinking about going forward, is that given the ipi/nivo well worked-out regimen and dose, and the fact that you are only going to be carrying your anti–CTLA-4 dosing for four cycles, it is a clear regimen for us to proceed with, all things considered, rather than running both of those activities for the duration of therapy.

Analyst: Got it. Thanks.

Terry Rosen: Thanks, Rich, and congrats again.

Operator: Our next question comes from the line of Salim Syed with Mizuho.

Analyst: This is Mike Linden on for Salim. Thanks for taking our question. Just one from us on cascadifan in frontline again. How are you thinking about patient selection for an ipi/nivo plus cascadifan combination for a Phase 3? Would these be all-comers versus poor, intermediate, favorable risk patients? And has the thinking around patient selection changed post–LITESPARK-012 failure? Thanks.

Terry Rosen: Our patient selection strategy has not changed. In fact, we are thinking of all-comers, and we would also be thinking of all-comers insofar as a TKI-inclusive regimen. What we are really trying to address there is that there is clearly—based on our advisory board meetings—a strong preference for a TKI-sparing regimen. That is unequivocal, and that is the bedrock of the frontline. With that said, there is a bit of “tribalism,” as investigators would describe it. Certain investigators are very prone—particularly if there is a bulky, fast-growing tumor, but even otherwise—to want to reach for a TKI. We feel that for that overlap of a particular patient with a particular investigator, there should be a HIF-2 inhibitor–containing regimen.

We think we can offer a very good one. We look at both of those to be in all-comer patient populations. The LITESPARK-012 data, for us—until we see something otherwise—simply reflect the durability of effect on HIF-2 inhibition with time, which we know is a dramatic difference between our two molecules. When we look at the choices of what to combine with, keep in mind, we have no commercial predisposition there. Essentially, the world is our oyster. In the frontline, there are a number of TKIs used; there is not one that is particularly dominant. Overall, you have probably 60% of the patients getting a TKI, but they are spread somewhat evenly. We have looked strategically at what is the smartest TKI from a safety standpoint—well used, well tested, approved, understood—that we should combine with in the frontline.

We know that we are going to have cabo in the second line. We have done the same thinking about that late-line patient population with what then becomes another TKI that you would use late-line. As I said, the other important thing there is that we are going to look at that combination of cascadifan plus that TKI in belzutafan-experienced patients and establish unequivocally that you get the activity that you want to see in that HIF-2–experienced patient.

Analyst: Thank you.

Operator: Our next question comes from the line of Jason Zemansky with Bank of America. Jason, your line is now open.

Jason Zemansky: Hi, this is Jackie on for Jason. Congrats on the progress, and thanks for taking our question. What do you think is necessary to drive broad uptake of a TKI-free regimen in first-line RCC, given how popular TKIs are overall—especially given their ability to rapidly debulk tumors—or is the goal to compete directly with dual IO therapies?

Terry Rosen: We think there is strong receptivity towards this. One of the most important things we have seen to date is that cascadifan as a monotherapy, even in the late line, performs as good or better than a TKI in any line of settings. Even in the late line, cascadifan monotherapy—whether you are looking at ORR or PFS—looks quite good. The thing that is standing out, and the issue identified with belzutafan at the outset, is the rate of primary progression. That raised the question for HIF-2 inhibition: can you compete with TKI in bringing the tumor under control quickly enough that you do not have that high rate of primary progression? We believe that belzutafan was forced in the frontline to combine with a TKI to address a potential high rate of primary progression.

We think that despite the fact that HIF-2 inhibition is well tolerated, it can get the tumor under control quite fast. The evidence is in combining with anti–PD-1: in 30 patients, we only saw two primary progressors—7%—very much in line with a TKI. We think there is receptivity to a TKI-sparing regimen, and the key to driving uptake will be to show that our rate of primary progression—and everything that flows from that—looks like a TKI. The last point is that TKIs are a rougher treatment; there is a linkage in people’s minds that associates “rougher” with “bringing the tumor more under control.” Keep in mind that 85% to 90%+ of clear cell RCC has HIF-2 as a key driver. You are hitting the tumor with something that really matters.

With a robust inhibitor like cascadifan, you can compete with the efficacy effects of a TKI.

Robert Goeltz: Just to add, the reason many clinicians prefer using ipi/nivo is it gives the patient the best chance for long-term survival. The Achilles heel, as Terry described, is the primary progression. If you could blunt that and still give patients the best chance at long-term survival—and we just saw 10-year follow-up data with 40% of patients alive 10 years later—that is a very compelling regimen, we think.

Jason Zemansky: Thank you so much for the color.

Operator: Our next question comes from the line of Emily Bodnar with H.C. Wainwright. Emily, your line is now open.

Emily Bodnar: Hi, thanks for taking the questions. On the LITESPARK-011 data, how are you looking at your upcoming cascadifan plus cabo updated data, and what are you hoping to see to feel confident that you might have a superior profile versus what we saw in the LITESPARK-011 trial? Thank you.

Terry Rosen: We already feel that confidence, and we are obviously running the Phase 3 trial. You kind of have to think of things holistically. In the end, what you are going to have is a hazard ratio, and since we are both running versus cabo, those will be directly comparable. While our data, when we share later this year, will still be early, we are going to give Kaplan-Meier curves, landmark PFS, and ORR. People will be able to extrapolate to whatever extent they want, but we will give a very holistic view. Another point we do not want lost is an interesting aspect of the data that will only be emerging as things play out by the time we have some mature data later this year. While from a regulatory standpoint PFS is what matters, we are going to have data from our monotherapy cohorts that are getting mature enough to start to get a sense of whether we bring an OS advantage there—albeit in the late line.

The reason that is important is that it may give a good sense that this mechanism can not only drive enhancements in PFS, but also bring enhancements to OS. While that may not be a regulatory requirement, we certainly could see it as an important differentiation that would drive more uptake by a clinician if, in fact, we start to show OS enhancement from HIF-2 inhibition—which we believe there is no reason there should not be.

Emily Bodnar: Thank you.

Operator: Our last question comes from the line of Yigal Nochomovitz with Citigroup. Yigal, your line is now open.

Analyst: Hi, this is Chuan Kim on for Yigal. Congrats on the progress and thanks for taking our question. A question regarding AB-102. While it is still early, is there any color you can provide on the intended proof-of-concept study design—whether you are planning on going into CSU versus AD first? Any color on primary endpoints or level of clinical signals you would need to see to give confidence to advance into a future registrational program?

Terry Rosen: Juan, why do you not describe how we see ourselves going from A to B to C in the near term?

Juan Jaen: At a very high level, we recognize that while we may have a better molecular profile, we have a little bit of ground to make up relative to the couple of existing clinical players. We have devised a fairly accelerated plan for establishing PK and tolerability in healthy volunteers, followed by a rapid mechanistic confirmation of biological activity, and very quickly progressing into a Phase 2 study in CSU. We think we will, in reasonable time, catch up and hopefully begin to illustrate the better profile of our drug. In parallel, we are thinking about where it might make sense—concurrently with that CSU-type Phase 2 study—to demonstrate the value of an MRGPRX2 inhibitor. Right now, our lead candidate for that additional indication seems to be allergic asthma, but that is still at a very early stage of conceptual framing.

Analyst: Thanks.

Operator: There are no further questions at this time. This concludes today’s call. Thank you for attending. You may now disconnect.

Terry Rosen: Thanks, everybody. Goodbye.

Receive real-time insider trading and news alerts